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HARTFORD — The new state budget counts on nearly $168 million in savings from curbing Medicaid fraud and overpayments.

But it doesn't spell out how that will be done.

The budget bill and related legislation do not detail the anti-fraud initiatives that are budgeted to save all this money that helped Gov. Dannel P. Malloy and Democrats in the legislature balance the new two-year state budget.

Despite the lack of details in the budget, there is a plan, though it is still being fleshed out.

The Malloy administration is preparing to hire consultants to help the state double-check Medicaid payments and identify patterns of waste, fraud and abuse.

This information is expected to lead to more Medicaid investigations and increase recoveries for overpayments and fraudulent payments.

The official $37.6 billion budget anticipates savings of nearly $64.5 million in the upcoming 2014 fiscal year that starts July 1 and $103.4 million in the 2015 fiscal year.

If the Medicaid savings are not realized, it could cause problems for the governor and lawmakers. Soaring Medicaid costs are already straining the budget.

The governor and the legislature had to close a $365 million budget shortfall in December because of increases in Medicaid enrollment and claims that exceeded budgeted levels.

Malloy said this spike in demand and Medicaid spending is behind the budget difficulties that have stubbornly nagged his administration. The governor just signed his second two-year state budget since taking office.

THE STATE'S SHARE of Medicaid represents billions of dollars, and state and federal spending on Medicaid is going to increase because of the Patient Protection and Affordable Care Act.

Medicaid is a state-federal program that helps pay for health care for the elderly, needy and disabled. It also assists low-income families with children.

The state is budgeted to spend $2.4 billion on Medicaid in the 2014 fiscal year and slightly less than $2.3 billion in the 2015 fiscal year. The federal share is more than $2.7 billion next year and $3.2 billion the following year.

The combined Medicaid budgets top $5 billion a year. Even a small percentage of improper payments can have a significant effect on costs.

A coming expansion of Medicaid is only going to amplify the importance of realizing savings targets and curbing fraud and overpayments.

The Affordable Care Act permits states to greatly expand Medicaid coverage for poor adults up to age 65 and substantially increases federal reimbursements.

Malloy and the legislature have decided to expand low-income coverage and take advantage of the higher reimbursement rates.

The federal government generally reimburses 50 percent of the state's Medicaid costs. States that expand Medicaid are eligible for 100 percent reimbursement from 2014 to 2016; then the federal match gradually decreases to 90 percent in 2020.

The administration now expects to receive an additional $450 million in Medicaid reimbursements in the 2014 fiscal year, and more than $1.1 billion in the following year.

The number of low-income adults on Medicaid is approaching 90,000 and the expansion is expected to add tens of thousands more.

MALLOY AND HIS BUDGET DIRECTOR are confident that the $167.9 million in anticipated Medicaid savings will be realized over the next two years.

Benjamin Barnes, the state budget director, acknowledged that how the bulk of these budgeted savings will be achieved is not laid out in legislation anywhere — and that he prefers it that way.

The lack of directions from the legislature gives the administration flexibility to design initiatives to realize the savings, Barnes said.

The governor's Office of Policy Management is readying to solicit proposals for consultants that specialize in reviewing Medicaid claims and others that do complex analyses to determine patterns of waste, fraud and abuse.

Malloy included such a recommendation in the budget plan that he proposed in February. His proposal only anticipated saving $60 million a year.

The $64.5 million savings anticipated in the first year of the budget roughly matches up, but the $103.4 million figure for the following year is nearly $40 million more. Barnes said increased savings in the second year is more aggressive, but not out of line.

In addition to consultants, additional positions are being added in the Department of Social Services, the Office of the Attorney General and the Division of Criminal Justice to achieve Medicaid savings.

Additionally, Malloy said an ongoing technology upgrade is going to allow the Department of Social Services to better root out waste, fraud and abuse.

THERE HAVE BEEN SEVERAL INITIATIVES in recent years to achieve big savings in Medicaid that did not work out.

As a result, the legislature has had to appropriate additional funding to cover the missed savings, including $104 million for the current budget year that is ending June 30.

The federal government rejected a waiver that the Department of Social Services requested to impose an asset limit of $10,000 for the Low-Income Adults program.

The LIA program provides medical coverage to childless adults between the ages of 19 and 64 with income up to about 60 percent of the federal poverty level. That is slightly more than $500 a month.

At this time, LIA enrollment is approaching 90,000 clients.

The waiver would have eliminated coverage for nearly 13,400 people. This would have saved an estimated $37 million in the Department of Social Services and another $12.5 million in the Department of Mental Health and Addiction Services.

This year's budget also anticipated $20 million in savings from another initiative to reduce improper Medicaid payments. It did not work out.

The unrealized savings were supposed to be recovered from insurance companies and other third parties that should have been paying for medical services that Medicaid covered.

The Department of Social Services also did not realize assumed savings of $47 million from streamlining the administration of the Medicaid program. This was connected to the conversion of Medicaid to a self-insured program.

The legislature had to approve an additional appropriation of $289 million for Department of Social Services, partly because of the failure to achieve this $104 million in anticipated Medicaid savings, and partly because of the continued growth in caseloads.

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